Stakeholder Definition and Examples

A stakeholder is a single person, group, or organization involved in or affected by the development and completion of a project. They have a vested interest in its outcome because it will benefit them in a certain way—either financially or through career advancement—and can impact its completion in many ways.

In recent years, interest in social responsibility has expanded the stakeholder definition to include other groups impacted by businesses, including local communities, government, and trade groups.

A stakeholder’s primary role is to help a company meet its strategic objectives by contributing their experience and perspective to a project. They can also provide necessary materials and resources. Their support is crucial to a successful project. According to stakeholder theory, if stakeholders don’t like the results, the project can often be considered a failure, even if all goals were met.

It’s up to the project manager to keep stakeholders happy through strategic stakeholder management: through direct and timely communications and understanding their expectations and time frame for the project. Such management builds trust and confidence among project stakeholders and affirms their buy-in, or positive cooperation.

There are two types of stakeholders in nearly all projects:

• Internal stakeholders: An internal stakeholder is a person or group linked directly to the company conducting the project. Internal stakeholders can include employees, who are members of the project team that will see it to completion, a project manager, resource manager, and line manager. Top company management, like the company president, board of directors, and operating committees, and outside contributors, like subcontractors and consultants, can also be considered internal stakeholders.
• External stakeholders. An external stakeholder is an entity that is not directly associated with the company involved in the project but is still impacted in some way by its outcome. External stakeholders can include vendors, suppliers, creditors, project customers, project testers, and a product user group.

The best way to identify stakeholders for a particular project is to perform stakeholder analysis. Stakeholder analysis involves first brainstorming a list of potential stakeholders and then determining which parties have the greatest investment in the project. For example, the major stakeholders in a corporation usually include its customers, employees, investors, suppliers, and the local community.

Depending on the scope of your project, you may not need to involve all stakeholders, or you might find that some groups of stakeholders are more impacted than others. Prioritization can help drive key stakeholder engagement and streamline decision-making to hit project objectives sooner.

There are many types of stakeholders in a business project:

1. 1. Customers: The customer is a primary stakeholder, which is an entity that is directly linked to the company and its economic success. Business owners generally consider the customer to be the most critical stakeholder because their buy-in allows the company to continue conducting business. Companies exist primarily to serve the needs of a customer base and benefit directly from their patronage.
2. 2. Employees: Company employees are key stakeholders because they create the goods and services issued by a company, and the quality of their work has a direct impact on customer support. Employees, in turn, benefit financially from the company’s continued performance and success. Strategic management of employees is crucial to a company’s welfare to maintain product quality and employee confidence.
   
3. 3. Governments: The government is a secondary stakeholder (meaning it is indirectly linked to the company) through its collection of taxes from employees and the company through corporate taxes. The government also benefits from the company’s success through its contribution to the gross domestic product (GDP). Other secondary stakeholders include the media and business support groups.
4. 4. Investors and shareholders: Investors, shareholders, and stockholders are all types of primary shareholders that keep companies financially viable and make projects possible by providing funds. They can also directly impact a company’s outlook when they are dissatisfied with its business plan or direction.
5. 5. Local communities: The area in which a business is located is considered a secondary stakeholder because it benefits from the company’s economic investment through job creation. Locally-based employees can then invest their income back into the community and improve its financial state.
6. 6. Suppliers and vendors: Though suppliers and vendors exist outside of a company, they are still considered primary stakeholders because they and the company they sell to benefit directly from the revenue generated from sales and services. These providers contribute resources, materials, and, in many cases, expertise that does not exist in-house with companies, which can improve a company’s ability to meet customer and shareholder needs.

Though they are similar in terms of their connection to the company, stakeholders and stockholders are not interchangeable. A stockholder is connected to the company by ownership of shares. Conversely, work contributions (employees), patronage (customers), or even taxation (in the case of the government) can link stakeholders to a company. Stakeholders can become stockholders if they invest in the company or are granted shares of its stocks.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.

A stakeholder is a single person, group, or organization involved in or affected by the development and completion of a project. They have a vested interest in its outcome because it will benefit them in a certain way—either financially or through career advancement—and can impact its completion in many ways.

In recent years, interest in social responsibility has expanded the stakeholder definition to include other groups impacted by businesses, including local communities, government, and trade groups.

A stakeholder’s primary role is to help a company meet its strategic objectives by contributing their experience and perspective to a project. They can also provide necessary materials and resources. Their support is crucial to a successful project. According to stakeholder theory, if stakeholders don’t like the results, the project can often be considered a failure, even if all goals were met.

It’s up to the project manager to keep stakeholders happy through strategic stakeholder management: through direct and timely communications and understanding their expectations and time frame for the project. Such management builds trust and confidence among project stakeholders and affirms their buy-in, or positive cooperation.

There are two types of stakeholders in nearly all projects:

• Internal stakeholders: An internal stakeholder is a person or group linked directly to the company conducting the project. Internal stakeholders can include employees, who are members of the project team that will see it to completion, a project manager, resource manager, and line manager. Top company management, like the company president, board of directors, and operating committees, and outside contributors, like subcontractors and consultants, can also be considered internal stakeholders.
• External stakeholders. An external stakeholder is an entity that is not directly associated with the company involved in the project but is still impacted in some way by its outcome. External stakeholders can include vendors, suppliers, creditors, project customers, project testers, and a product user group.

The best way to identify stakeholders for a particular project is to perform stakeholder analysis. Stakeholder analysis involves first brainstorming a list of potential stakeholders and then determining which parties have the greatest investment in the project. For example, the major stakeholders in a corporation usually include its customers, employees, investors, suppliers, and the local community.

Depending on the scope of your project, you may not need to involve all stakeholders, or you might find that some groups of stakeholders are more impacted than others. Prioritization can help drive key stakeholder engagement and streamline decision-making to hit project objectives sooner.

There are many types of stakeholders in a business project:

1. 1. Customers: The customer is a primary stakeholder, which is an entity that is directly linked to the company and its economic success. Business owners generally consider the customer to be the most critical stakeholder because their buy-in allows the company to continue conducting business. Companies exist primarily to serve the needs of a customer base and benefit directly from their patronage.
2. 2. Employees: Company employees are key stakeholders because they create the goods and services issued by a company, and the quality of their work has a direct impact on customer support. Employees, in turn, benefit financially from the company’s continued performance and success. Strategic management of employees is crucial to a company’s welfare to maintain product quality and employee confidence.
   
3. 3. Governments: The government is a secondary stakeholder (meaning it is indirectly linked to the company) through its collection of taxes from employees and the company through corporate taxes. The government also benefits from the company’s success through its contribution to the gross domestic product (GDP). Other secondary stakeholders include the media and business support groups.
4. 4. Investors and shareholders: Investors, shareholders, and stockholders are all types of primary shareholders that keep companies financially viable and make projects possible by providing funds. They can also directly impact a company’s outlook when they are dissatisfied with its business plan or direction.
5. 5. Local communities: The area in which a business is located is considered a secondary stakeholder because it benefits from the company’s economic investment through job creation. Locally-based employees can then invest their income back into the community and improve its financial state.
6. 6. Suppliers and vendors: Though suppliers and vendors exist outside of a company, they are still considered primary stakeholders because they and the company they sell to benefit directly from the revenue generated from sales and services. These providers contribute resources, materials, and, in many cases, expertise that does not exist in-house with companies, which can improve a company’s ability to meet customer and shareholder needs.

Though they are similar in terms of their connection to the company, stakeholders and stockholders are not interchangeable. A stockholder is connected to the company by ownership of shares. Conversely, work contributions (employees), patronage (customers), or even taxation (in the case of the government) can link stakeholders to a company. Stakeholders can become stockholders if they invest in the company or are granted shares of its stocks.

Get the MasterClass Annual Membership for exclusive access to video lessons taught by business luminaries, including Sara Blakely, Chris Voss, Robin Roberts, Bob Iger, Howard Schultz, Anna Wintour, and more.